The business and culture of our digital lives, from the L.A. Times

Online TV service Ivi loses a round in court [Updated]

February 22, 2011 | 12:00
pm

A federal judge in New York ordered Internet TV service Ivi to shut down Tuesday, finding that it violated the copyrights of a group of broadcasters and Major League Baseball. It was yet another example of a tech company trying in vain to stretch the boundaries of copyright law to avoid paying as much for content as its more conventional competitors.

Ivi TV captured the broadcasts of 55 stations in Los Angeles, Seattle, Chicago and New York, then retransmitted them through the Internet to subscribers for a fee of just under $5 a month. For an additional 99 cents a month, viewers could pause, rewind and fast-forward shows, although they could not record them for later viewing.

Copyright law gives cable operators the right to carry broadcast stations if several conditions are met, and provided that they pay a small portion of their revenue in royalties. But the law also requires that cable operators abide by Federal Communications Commissions regulations, which (among other things) give broadcasters the right to demand higher fees for retransmission rights.

Ivi argued that it was a cable system entitled to carry broadcast signals, but also that it was an Internet service and so immune from FCC regulation. As such, it argued that it could retransmit stations online while paying royalties -- about $100 a year, according to U.S. District Judge Naomi Reice Buchwald's ruling. Major League Baseball and two dozen broadcasters and studios (including two arms of the Tribune Co., owner of the Los Angeles Times) sued, arguing that Internet-based services aren't cable systems and as such are not entitled to an automatic (or "compulsory") retransmission license.

Buchwald agreed, granting a preliminary injunction against Ivi. She held that Congress created the compulsory license for local cable systems, not national (or global) operators online, and did so within a larger regulatory framework:

Congress legislated with an understanding that the cable systems it was granting a compulsory license to would also be subject to the regulations of the FCC.... [N]o company or technology which refuses to abide by the rules of the FCC has ever been deemed a cable system for purposes of the Copyright Act. Significantly, companies such as AT&T U-Verse, which claim to operate outside of the jurisdiction of the Communications Act, still comply with these rules, most significantly by obtaining retransmission consent.

She also said that if Ivi's interpretation of the law were taken to its logical conclusion, the result would be absurd:

As plaintiffs argue, defendants’ view of Section 111 essentially means that anyone with a computer, Internet connection, and TV antenna can become a “cable system” for purposes of Section 111. It cannot be seriously argued that this is what Congress intended.

Ivi had a number of supporters among pro-technology public-interest groups, which argued that Ivi benefited the public by providing more competition to incumbent cable and satellite TV services. But Buchwald held that the law doesn't hold the door open to online competitors, who cannot enter the market without the permission of the broadcasters whose signals they seek to retransmit.

The company and its allies also tried to persuade the court not to act until the lawsuit could go to trial, arguing that Ivi is too small to divert a meaningful amount of advertising away from broadcast TV in the interim. Buchwald pointedly disagreed:

Defendants cannot seriously argue that the existence of thousands of companies who legitimately use plaintiffs’ programming and pay full freight means that Ivi’s illegal and uncompensated use does not irreparably harm plaintiffs. Likewise, they cannot contend that since Ivi is small and plaintiffs are large, they should be allowed to continue to steal plaintiffs’ programming for personal gain until a resolution of this case on the merits. Such a result leads to an unacceptable slippery slope.

It's easy to understand why companies like Ivi keep trying to find ways to deliver TV signals despite the limits imposed by time, space and contracts. Live broadcast television remains the most popular video medium in U.S. homes, attracting the biggest audiences and generating the most advertising dollars. Only a few companies have found a way to do so without running afoul of TV industry lawyers -- TiVo and Sling being two good examples. Others, such as ReplayTV and ICraveTV, have not. Buchwald's decision Tuesday was just a preliminary one, but she moved Ivi much closer to the latter category than the former.

Judge Buchwald's opinion is premised on her statement that ivi is 'not complying with the rules and regulations of the FCC'. This conclusion is simply false, as ivi has met with the all the commisioner's offices of the FCC repeatedly and has received assurances that we are in full and complete compliance. Judge Buchwald makes the legal mistake of misinterpreting the copyright law to instead make communications policy. Communications policy is the province of the FCC and, by basing a judicial copyright decision on communications regulations to be administered by the FCC, the judge is overstepping her constitutional authority.]